Starting a new business is an exciting venture, but it does not come without risks. Crafting a new business plan, creating a product or service, and finding a company name are always the most exciting parts of starting a business. However, there are many other things entrepreneurs should consider when starting a small business. Our Rockford business attorneys explain some things you should look out for when starting a business.
Choosing the Right Business Entity
An important initial decision when starting a new business is the selection of the legal structure in which the business is to be operated. When you create a business, there are many types of business organizations to choose from. However, four basic types are most commonly used.
The four main types of businesses are:
- Sole Proprietorships: These companies are indistinguishable from their owners. All of your company’s profits are yours and you can make any decision without fear of conflict from a partner. You are, however, entirely liable for the business’ debts. Additionally, ownership is difficult to transfer if you decide to sell the business after all.
- Partnerships: This type of company allows two or more partners to invest their assets, property, and work into a business. Partners are often 100-percent liable for business debts, unless the company is organized as a limited liability partnership. Partnership agreements typically govern how these businesses are run. They also plan for events like dissolution or the retirement or death of a partner.
- Limited Liability Company (“LLC”): LLCs can look like partnerships because members share in the ownership and benefit as partners do from profit. Members are also limited in their liability for debts and losses of the LLC.
- Corporations: Corporations limit their owners’ liability for corporate debts—profits and losses are the responsibility as the corporation as an entity, not an individual person. Management of the corporation is carried out by directors and officers.
There are advantages and disadvantages to the various types of business entities, so it is important for you to take your time to find the right one for your company. The attorneys at Reno & Zahm LLP can help you decide which type of business will protect you and your company's best interests.
It’s also important for entrepreneurs to comply with state and federal employment laws. For example, Illinois requires businesses to provide workers’ compensation insurance and benefits depending on the size of your business. The business must also comply with federal rules governing how employees are compensated, withholding taxes from employee paychecks and the conditions under which employees work.
Registering with Federal, State & Local Government Agencies
No matter the type of business you intend to operate, you will have to register with various government agencies. The number and type of registrations and permits varies dramatically by business. We can help you navigate these obligations.
Tax & Insurance Obligations
We work with your accountant, tax advisor and insurance agent to ensure you are set up to effectively and efficiently carry out your business plan. There are a host of considerations for new business owners related to taxation and insurance coverage, and we provide counsel and coordination to ensure you’re getting the best advice possible.
Rockford Business Law Attorneys
When starting a business, it is vital to have an experienced business attorney on your side. Small businesses can face serious legal issues if they don’t operate according to the law. Protect your new business by calling our team at Reno & Zahm LLP. We have the skills, experience, and knowledge needed to help you in your business venture.
Contact our Rockford business law attorneys today at (779) 235-9115 to schedule a virtual consultation!